The Problem with API Neutrality

I’ve been hearing more rumblings about “API neutrality” lately. This idea, which originated with Jonathan Zittrain’s book, The Future of the Internet–And How to Stop It, proposes to apply Net neutrality to the code/application layer of the Internet. A blog called “The API Rating Agency,” which appears to be written by Mehdi Medjaoui, posted an essay last week endorsing Zittrain’s proposal and adding some meat to the bones of it. (My thanks to CNet’s Declan McCullagh for bringing it to my attention).

Medjaoui is particularly worried about some of Twitter’s recent moves to crack down on 3rd party API uses. Twitter is trying to figure out how to monetize its platform and, in a digital environment where advertising seems to be the only business model that works, the company has decided to establish more restrictive guidelines for API use. In essence, Twitter believes it can no longer be a perfectly open platform if it hopes to find a way to make money. The company apparently believes that some restrictions will need to be placed on 3rd party uses of its API if the firm hopes to be able to attract and monetize enough eyeballs.

While no one is sure whether that strategy will work, Medjaoui doesn’t even want the experiment to go forward. Building on Zittrain, he proposes the following approach to API neutrality:

Absolute data to 3rd party non-discrimination : all content, data, and views equally distributed on the third party ecosystem. Even a competitor could use an API in the same conditions than all others, with not restricted re-use of the data.

Limited discrimination without tiering : If you don’t pay specific fees for quality of service, you cannot have a better quality of service, as rate limit, quotas, SLA than someone else in the API ecosystem.If you pay for a high level Quality of service, so you’ll benefit of this high level quality of service, but in the same condition than an other customer paying the same fee.

First come first served : No enqueuing API calls from paying third party applications, as the free 3rd-party are in the rate limits.

Before I critique this, let’s go back and recall why Zittrain suggested we might need API neutrality for certain online services or digital platforms. Although Zittrain does not label it as such, API neutrality assumes the platform or device in question is a sort of public utility or common carrier. Zittrain is concerned that the absence of API neutrality could imperil “generativity,” technologies or networks that invite or allow tinkering and all sorts of creative secondary uses. Primary examples include general-purpose personal computers (PCs) and the traditional “best efforts” Internet. By contrast, Zittrain contemptuously refers to “tethered, sterile appliances,” or digital technologies or networks that discourage or disallow tinkering. Zittrain’s primary examples are proprietary devices like Apple’s iPhone or the TiVo, or online walled gardens like the old AOL and current cell phone networks. Such “take it or leave it” devices or platforms earn Zittrain’s wrath. He argues that we run the risk of seeing the glorious days of generative devices and the open Internet give way to those tethered appliances and closed networks. He fears most users will flock to tethered appliances in search of stability or security, and worries because those tethered appliances are less “open” and more “regulable,” thus allowing easier control by either large corporate intermediaries or government officials. In other words, the “future of the Internet” Zittrain is hoping to “stop” is a world dominated by tethered digital appliances and walled gardens, because they are too easily controlled by other actors. He argues:

If there is a present worldwide threat to neutrality in the movement of bits, it comes not from restrictions on traditional Internet access that can be evaded using generative PCs, but from enhancements to traditional and emerging appliancized services that are not open to third-party tinkering.

Because he fears the rise of “walled gardens” and “mediated experiences,” Zittrain goes on to wonder, “Should we consider network neutrality-style mandates for appliancized systems?” He responds to his own question as follows:

The answer lies in that subset of appliancized systems that seeks to gain the benefits of third-party contributions while reserving the right to exclude it later. . . . Those who offer open APIs on the Net in an attempt to harness the generative cycle ought to remain application-neutral after their efforts have succeeded, so all those who built on top of their interface can continue to do so on equal terms. (p. 183-4)

While many would agree that API neutrality represents a fine generic norm for online commerce and interactions, Zittrain implies it should be a legal standard to which online providers are held. He even alludes to the possibility of applying the common law principle of adverse possession more broadly in these contexts. He notes that adverse possession “dictates that people who openly occupy another’s private property without the owner’s explicit objection (or, for that matter, permission) can, after a lengthy period of time, come to legitimately acquire it.” (p. 183) He does not make it clear when that principle would be triggered as it pertains to digital platforms or social media APIs. But it would seem clear that his API neutrality rule would eventually regulate the major information providers and platforms of our day, including: Apple, Google, Twitter, Facebook, and many others.

As I argued in my paper, “The Perils of Classifying Social Media Platforms as Public Utilities,” API neutrality regulation is a dangerous notion. There are many problems with the logic of Zittrain’s API neutrality proposal and with the application of adverse possession to social media platforms or digital applications. What follows below is my critique of the notion that appeared in that paper, and it also explains why Medjaoui’s new formulation and clarification of the principle is equally problematic.

First, most developers who offer open APIs are unlikely to close them later because they do not want to incur the wrath of “those who built on top of their interfaces,” to use Zittrain’s parlance. Social media services make themselves more attractive to users and advertisers by providing platforms with plentiful opportunities for diverse interactions and innovations. The “walled gardens” of the Internet’s first generation are largely things of the past. Thus, a powerful self-correcting mechanism is at work in this space. If social media operators were to lock down their platforms or applications in a highly restrictive fashion, both application developers and average users would likely revolt. Moreover, a move to foreclose or limit generative opportunities could spur more entry and innovation as other application (“app”) developers and users seek out more open, pro-generative alternatives.

Consider an example involving Apple and the iPhone. Shortly after the iPhone’s release, Apple reversed itself and opened its iPhone platform to third-party app developers. The result was an outpouring of innovation. Customers in more than 123 countries had downloaded more than eighteen billion apps from Apple’s App Store at a rate of more than 1 billion apps per month as of late 2011.

But what if Apple decides to suddenly shut its App Store and prohibit all third-party contributions, after initially allowing them? There is no obvious incentive for Apple to do so, and there are plenty of competitive reasons for Apple not to close off third-party development, especially as its application dominance is a key element of Apple’s success in the smartphone and tablet sectors. Under Zittrain’s proposed paradigm, regulators would treat the iPhone as the equivalent of a commoditized common carriage device and force the App Store to operate on regulated, public utility–like terms without editorial or technological (and perhaps interoperability) control by Apple itself. But if Apple were to open the door to developers only to slam it shut a short time later, the company would likely lose those developers and customers to alternative platforms. Google, Amazon, Microsoft, and others would be only too happy to take Apple’s business by offering a wealth of stores and devices that allow users greater freedom. Market choices, not regulatory edicts such as mandatory API neutrality, should determine the future of the Internet.

The same logic indicates the likely counterproductive effects of efforts to impose API neutrality on Twitter. Until recently, Twitter had a voluntary open access policy in that it allowed nearly unlimited third-party reuse and modification of its API. It is now partially abandoning that policy by taking greater control over the uses of its API. This policy reversal will, no doubt, lead to claims that the company is acting like one of Tim Wu’s proverbial “information empires” and that perhaps Zittrain’s API neutrality regime should be put in place as a remedy. Indeed, Zittrain has already referred to Twitter’s move as a “bait-and-switch” and recommended an API neutrality remedy. Zittrain’s actions could foreshadow more pressure from academics and policymakers that will first encourage Twitter to continue open access, but then potentially force the company to grant nondiscriminatory access to its platform on regulated terms. Nondiscriminatory access would represent a step toward the forced commoditization of the Twitter API and the involuntary surrender of the company’s property rights to some collective authority that will manage the platform as a common carrier or essential facility.

Yet again, innovation and competitive entry remain possible in this arena. There is nothing stopping other microblogging or short-messaging services from offering alternatives to Twitter. Some people would decry the potential lack of interoperability among competing services at first, but innovators would quickly find work-arounds. A decade ago, similar angst surrounded AOL’s growing power in the instant-messaging (IM) marketplace. Many feared AOL would monopolize the market and exclude competitors by denying interconnection. Markets evolved quickly, however. Today, anyone can download a free chat client like Digsby or Adium to manage IM services from AOL, Yahoo!, Google, Facebook, and just about any other company, all within a single interface, essentially making it irrelevant which chat service your friends use. These innovations occurred despite a mandate in the conditions of Time Warner’s acquisition of AOL that the post-merger firm provide for IM interoperability. The provision was quietly sunset as irrelevant a short three years later.

A similar market response could follow Twitter’s to exert excessive control over its APIs. In web 2.0 markets—that is, markets built on pure code—the fixed costs of investment are orders of magnitude less than they were with the massive physical networks of pipes and towers from the era of analog broadcasting and communications. Thus, major competition for Twitter is more than possible, and it is likely to come from sources and platforms we cannot currently imagine, just as few of us could have imagined something like Twitter developing.

Even if some social media platform owners did want to abandon previously open APIs and move to a sort of walled garden, there is no reason to classify such a move as anticompetitive foreclosure or leveraging of the platform. Marketplace experimentation in search of a sustainable business model should not be made illegal. Since most social media sites such as Twitter do not charge for the services they provide, some limited steps to lock down their platforms or APIs might help them earn a return on their investments by monetizing traffic on their own platforms. If a social media provider had to live under a strict version of Zittrain’s API neutrality principle, however, it might be extremely difficult to monetize traffic and increase businesses since the company would be forced to share its only valuable intellectual property.

In sum, if the government were to forcibly apply API neutrality or adverse possession principles through utility-like regulation, it would send a signal to social media entrepreneurs that their platforms are theirs in name only and could be coercively commoditized once they are popular enough. Such a move would constitute a serious disincentive to future innovation and investment. “API neutrality” would upend the way much of the modern digital economy operates and cripple many of America’s most innovative companies and sectors. In the long run, such changes could sacrifice America’s current role as a global information technology leader. For these reasons, API neutrality mandates should be rejected.

Adam Thierer / Adam is a senior research fellow at the Mercatus Center at George Mason University. He previously served as President of the Progress & Freedom Foundation, Director of Telecom. Studies at the Cato Institute, and Fellow in Economic Policy at the Heritage Foundation.